You may think that your Social Security checks will be whatever they will be and that you can’t control how big they are. If you do think that, you are being wrong, as there are plenty of ways you can beef up those benefits, especially if retirement is not around the corner.
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Once you set up a “my Social Security” account, for example, you might check out the record of your earnings that the Social Security Administration has. Make sure that data is correct, as it is used to calculate your benefits and you want to make sure everything is accurate.
Here are three other effective ways to bolster those benefits:
1. Work at least 35 years
Social Security uses a formula to determine how much money to send you every month in your retirement factors in your earnings from the 35 years in which you earned the most (with every year’s income adjusted for inflation). So let’s say you work only 28 years before retiring, there will be seven zeros factored into the equation, and that will result in a benefit amount much smaller than it could have been.
2. Work over 35 years
The more you earn during your working life, the bigger your benefits will be, obviously, to a certain degree.
For instance, let’s say you did work for those 35 years, and as you approach age 62, the earliest age at which you can claim your benefits, you start to think of calling it quits. If your first few years featured a lot of part-time work, or your earnings were low back then, those low numbers will hurt your benefit check. It’s the same if you earned reasonable, fairly average incomes in your first bunch of working years, but you’re now earning much more than you ever did, even on an inflation-adjusted basis.
You may be able to increase your future benefits significantly in those cases, by working for a few more years.
Your lowest-earning year’s income will be kicked out of the calculation for every additional year you work.
You can also work aggressively to increase your income for a few years, perhaps by taking on a side gig, getting a higher-paying position, or switching into a more lucrative profession.
3. Delay starting to collect your benefits
Simply, delay when you start collecting the benefits. Each of us has a “full retirement age” at which we can start collecting the full benefits to which we’re entitled. 66, 67, or somewhere in between is for most of us. But as early as age 62, we can start collecting Social Security retirement benefits. The catch is that they’ll be smaller than if we started collecting later, but we’ll collect many more checks this way.
For every year that we do so beyond our full retirement age and up to age 70, our benefits will grow by about 8%. So waiting from age 67 to 70 can make our checks 24% bigger. But note that if we delay, we’ll end up collecting fewer checks. The system is actually designed so that it doesn’t matter when we start collecting if we live an average-length life.
But if we can, there are still plenty of good reasons to delay. If we’re married and we’re the higher earner in the family, then it can be smart to maximize our benefits because when one spouse dies, the other gets to collect either benefit, whichever is larger — and that can really help out the lower-earning spouse. Also, if we are in good health and stand a decent chance of living a longer-than-average life, then we’ll come out ahead.
Inflation is the last consideration and the cost-of-living adjustments (COLAs) that Social Security recipients receive in most years. The bigger your benefit, the bigger your annual increase will be.
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